Creswell, 52, of The Green, Ingham, also failed to declare income from properties he rented, while Williamson lied about his earnings when claiming tax credits.

The duo spent the money from the fraud on parties, extravagant meals, trips abroad, clothes and home improvements.

HM Revenue and Customs (HMRC) uncovered the frauds after discovering the pair’s spending was way beyond their declared incomes.

Richard Paris, Assistant Director of HMRC's Fraud Investigation Service, said: "This was a pre-planned, deliberate attempt by these men to steal public money, in a bid to line their own pockets.

A bundle of cash found at Williamson's home. Photo: HMRC.

“HMRC will pursue people like Creswell and Williamson who attempt to defraud the system and take money away from our vital public services."

During the investigation HMRC officers found that while Creswell claimed to earn up to just £8,000 a year, his monthly outgoings were regularly about £3,500. And Williamson, 44, said his annual income was £14,000, but he paid £1,200 per month in rent alone.

Creswell’s letting company submitted 25 false VAT returns worth £148,154 in stolen tax. He also failed to declare that he rented out five properties, meaning he should have paid £16,823 in income tax on the rental income.

Williamson and Creswell jointly ran Lincoln Car Sales Ltd. Williamson admitted making up the company’s VAT figures and submitting 23 false returns to fraudulently claim £179,423. He also stole £17,356 in tax credits by under-declaring his income on application forms.

The games room at Williamson's house. The pair stole the money to fund their lifestyles. Photo: HMRC.

The men were arrested in October 2014 when HMRC officers raided their homes. Cash in the sum of £3,450 was found in Creswell’s property while £11,900 and 885 euros were discovered in Williamson’s house. The money has been forfeited.

Williamson, 44, of Crow Tree Lane, Rastrick, West Yorkshire, was jailed for 18 months and Creswell for 12 months at Lincoln Crown Court on Thursday, having pleaded guilty at an earlier hearing.